Rayonier (NYSE:RYN) today reported first quarter 2012 net income
of $53 million, or 42 cents per share, compared to $58 million, or
47 cents per share, in the prior year period.
Cash provided by operating activities was $111 million compared
to $116 million in first quarter 2011. Cash available for
distribution (“CAD”)1 was $87 million versus $88 million in first
quarter 2011. (See Schedule D for more details.)
“We are pleased with our first quarter results which were better
than expected and create a solid base for full year performance,”
said Paul G. Boynton, President and CEO. “In Forest Resources, we
increased harvest volumes to take advantage of stronger pulpwood
markets in the Atlantic region and successfully integrated the
320,000 acres of timberlands acquired last year. In Performance
Fibers, we implemented our previously announced cellulose
specialties price increases, driven by continued strong demand, and
executed planned maintenance shutdowns at both of our manufacturing
facilities.
“In February, Moody’s Investors Services raised our investment
grade debt rating to ‘Baa1.’ In March, we successfully issued $325
million of 3.75% Senior Notes due in 2022. With our strong
liquidity, balance sheet and cash flow, we are well positioned to
pursue growth initiatives,” added Boynton.
Forest Resources
Sales of $52 million were $4 million above the prior year
period, while operating income of $8 million decreased $3 million.
In the Atlantic region, results improved due to stronger pulpwood
demand, while in the Gulf States region earnings increased due to
higher volumes from the 2011 timberland acquisitions. In the
Northwest U.S. and New Zealand, results declined reflecting lower
log shipments to China, as expected. The Northern region results
also reflect higher fuel and logging costs.
Real Estate
Sales of $13 million and operating income of $6 million were
both $1 million below the prior year period. In first quarter 2012,
average price per acre was slightly below the prior year period
mainly due to geographic mix.
Performance Fibers
Sales of $251 million were consistent with the prior year
period, while operating income of $81 million was $5 million
higher. Cellulose specialties price increases more than offset
higher production costs and a decline in absorbent materials prices
due to weaker demand. Also impacting 2012 results were lower
volumes for both cellulose specialties and absorbent materials due
to the timing of customer orders.
Other Items
Corporate and other operating expenses were $3 million above the
prior year period primarily due to the recognition of stock-based
compensation expense associated with Lee Thomas’ retirement.
Interest and other expenses were slightly below the prior year
period due to lower cost of borrowings and higher capitalized
interest related to the cellulose specialties expansion
project.
The first quarter effective tax rate was 25.9 percent compared
to 21.7 percent in 2011. The increased tax rate was due to expected
proportionately higher earnings from our taxable REIT subsidiaries
in 2012.
Outlook
“We are well positioned for another strong operating year in
2012,” added Boynton. “In Forest Resources, we will continue
capitalizing on local market opportunities in our Atlantic and Gulf
regions, while in the Northwest we plan to increase harvest volumes
as Asian markets improve. In Performance Fibers, we anticipate
another record year driven by strong cellulose specialties markets
and we are on track to complete our cellulose specialties expansion
project by mid-2013, as planned. We expect full year earnings to be
comparable to 2011, excluding special items, and CAD to range from
$285 million to $310 million, substantially above our dividend,”
Boynton concluded.
Further Information
A conference call will be held on Tuesday, April 24, 2012 at 2
p.m. EDT to discuss these results. Presentation materials and
access to the live webcast will be available at www.rayonier.com.
Investors may also choose to access the conference call by dialing
(888) 790-3052, password: Rayonier. A replay of this webcast will
be available on the Company’s website shortly after the call.
Complimentary copies of Rayonier press releases and other financial
documents are also available by calling 1-800-RYN-7611.
1 CAD is a non-GAAP measure defined and reconciled to GAAP in
the attached exhibits.
Rayonier is a leading international forest products company with
three core businesses: Forest Resources, Real Estate and
Performance Fibers. The company owns, leases or manages 2.7 million
acres of timber and land in the United States and New Zealand. The
company's holdings include approximately 200,000 acres with
residential and commercial development potential along the
Interstate 95 corridor between Savannah, GA and Daytona Beach, FL.
Its Performance Fibers business is one of the world's leading
producers of high-value specialty cellulose fibers, which are used
in products such as filters, pharmaceuticals and LCD screens.
Approximately 45 percent of the company's sales are outside the
U.S. to customers in approximately 40 countries. Rayonier is
structured as a real estate investment trust. More information is
available at www.rayonier.com.
Certain statements in this document regarding anticipated
financial outcomes including earnings guidance, if any, business
and market conditions, outlook and other similar statements
relating to Rayonier's future financial and operational
performance, are "forward-looking statements" made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995 and other federal securities laws. These
forward-looking statements are identified by the use of words such
as "may," "will," "should," "expect," "estimate," "believe,"
"anticipate" and other similar language. Forward-looking statements
are not guarantees of future performance and undue reliance should
not be placed on these statements.
The following important factors, among others, could cause
actual results to differ materially from those expressed in
forward-looking statements that may have been made in this
document: the effect of the current economic downturn, which
continues to impact many areas of our economy, including the
housing market, availability and cost of credit, and demand for our
products and real estate; the cyclical and competitive nature of
the industries in which we operate; fluctuations in demand for, or
supply of, our forest products and real estate offerings; entry of
new competitors into our markets, particularly in our Performance
Fibers business; changes in global economic conditions and world
events, including political changes in particular regions or
countries; the uncertainties of potential impacts of
climate-related weather changes and legislative initiatives;
changes in energy and raw material prices, particularly for our
Performance Fibers and wood products businesses; impacts of the
rising cost of fuel, including the cost and availability of
transportation for our products, both domestically and
internationally, and the cost and availability of third party
logging and trucking services; unanticipated equipment maintenance
and repair requirements at our manufacturing facilities; the
geographic concentration of a significant portion of our
timberland; our ability to identify, finance and complete
timberland acquisitions; changes in environmental laws and
regulations, including laws regarding air emissions and water
discharges, remediation of contaminated sites, timber harvesting,
delineation of wetlands, and endangered species, that may restrict
or adversely impact our ability to conduct our business, or
increase the cost of doing so; adverse weather conditions, natural
disasters and other catastrophic events such as hurricanes, wind
storms and wildfires, which can adversely affect our timberlands
and the production, distribution and availability of our products
and raw materials such as wood, energy and chemicals; interest rate
and currency movements; our capacity to incur additional debt, and
any decision we may make to do so; changes in tariffs, taxes or
treaties relating to the import and export of our products or those
of our competitors; the ability to complete like-kind exchanges of
property; changes in key management and personnel; our ability to
continue to qualify as a REIT and to fund distributions using cash
generated through our taxable REIT subsidiaries and changes in tax
laws that could reduce the benefits associated with REIT
status.
In addition, specifically with respect to our Real Estate
business, the following important factors, among others, could
cause actual results to differ materially from those expressed in
forward-looking statements that may have been made in this
document: the cyclical nature of the real estate business
generally, including fluctuations in demand for both entitled and
unentitled property; the current downturn in the housing market;
the lengthy, uncertain and costly process associated with the
ownership, entitlement and development of real estate, especially
in Florida, which also may be affected by changes in law, policy
and political factors beyond our control; the potential for legal
challenges to entitlements and permits in connection with our
properties; unexpected delays in the entry into or closing of real
estate transactions; the existence of competing developers and
communities in the markets in which we own property; the pace of
development and the rate and timing of absorption of existing
entitled property in the markets in which we own property; changes
in the demographics affecting projected population growth and
migration to the Southeastern U.S.; changes in environmental laws
and regulations, including laws regarding water withdrawal and
management and delineation of wetlands, that may restrict or
adversely impact our ability to sell or develop properties; the
cost of the development of property generally, including the cost
of property taxes, labor and construction materials; the timing of
construction and availability of public infrastructure; and the
availability of financing for real estate development and mortgage
loans.
Additional factors are described in the company's most recent
Form 10-K and 10-Q reports on file with the Securities and Exchange
Commission. Rayonier assumes no obligation to update these
statements except as is required by law.
RAYONIER INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED
INCOME
March 31, 2012 (unaudited)
(millions of dollars, except per share
information)
Three Months Ended March 31, December 31,
March 31, 2012 2011 2011
Sales $ 355.8 $ 388.4
$ 357.7 Costs and expenses Cost of sales 253.3 287.3 257.5
Selling and general expenses 19.6 18.4 16.4 Other operating
(income) expense, net (a) (1.1 ) 1.4 (3.8 )
Operating
income (a) 84.0 81.3 87.6 Interest expense (11.8 ) (12.5 )
(13.3 ) Interest and other (expense) income, net (0.1 ) (0.1 ) 0.2
Income before taxes 72.1 68.7 74.5 Income tax expense
(18.7 ) (12.5 ) (16.1 )
Net income $ 53.4 $ 56.2
$ 58.4
Net Income per Common Share (b): Basic
Net Income $ 0.44 $ 0.46 $ 0.48 Diluted Net
Income $ 0.42 $ 0.45 $ 0.47 Pro forma Net
Income (c) $ 0.42 $ 0.48 $ 0.47
Dividends per share (b) $ 0.40 $ 0.40 $ 0.36
Weighted Average Common Shares used for
determining (b) Basic EPS 122,352,435 121,783,843
121,420,046 Diluted EPS (d) 127,932,129 125,474,349
124,295,459
(a) The three months ended December 31,
2011 included a $6.5 million increase in a disposition reserve.
(b) EPS, dividends per share and weighted
average common shares for the three months ended March 31, 2011
have been adjusted to reflect the August 2011 3-for-2 stock
split.
(c) Pro forma net income is a non-GAAP
measure. See Schedule D for a reconciliation to the nearest GAAP
measure.
(d) The increase in dilutive shares for
the three months ended March 31, 2012 is primarily due to the
potential impact of the Senior Exchangeable Notes due in 2012 and
2015.
A
RAYONIER INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AND STATEMENTS OF CASH FLOWS
March 31, 2012 (unaudited)
(millions of dollars)
CONDENSED CONSOLIDATED BALANCE SHEETS March 31,
December 31, 2012 2011
Assets Cash and cash equivalents $
236.6 $ 78.6 Other current assets 261.5 265.8 Timber and
timberlands, net of depletion and amortization 1,504.3 1,503.7
Property, plant and equipment 1,679.3 1,619.2 Less - accumulated
depreciation (1,157.3 ) (1,157.6 ) Net property, plant and
equipment 522.0 461.6 Investment in New Zealand JV 74.4 69.2 Other
assets 195.1 190.4 $ 2,793.9 $ 2,569.3
Liabilities and Shareholders' Equity Current maturities of
long-term debt $ 50.5 $ 28.1 Other current liabilities 182.6 150.1
Long-term debt 973.7 819.2 Non-current liabilities for dispositions
and discontinued operations 79.2 80.9 Other non-current liabilities
165.5 167.9 Shareholders' equity 1,342.4 1,323.1 $
2,793.9 $ 2,569.3
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS Three Months Ended March 31, 2012 2011
Cash provided by operating activities: Net income $ 53.4 $
58.4 Depreciation, depletion, amortization 31.2 31.9 Non-cash basis
of real estate sold 1.4 0.3 Other items to reconcile net income to
cash provided by operating activities 14.0 11.6 Changes in working
capital and other assets and liabilities 11.4 13.5
111.4 115.7
Cash used for investing
activities: Capital expenditures (42.1 ) (34.8 ) Purchase of
timberlands (8.7 ) (2.9 ) Jesup mill cellulose specialties
expansion (gross purchases of $41.1, net of purchases on account of
$15.1) (26.0 ) — Change in restricted cash (5.6 ) — Other 8.7
6.9 (73.7 ) (30.8 )
Cash provided by (used for)
financing activities: Changes in debt, net of issuance costs
171.4 (75.0 ) Dividends paid (49.2 ) (44.0 ) Issuance of common
shares 2.1 5.4 Repurchase of common shares (7.8 ) (7.8 ) Excess tax
benefits on stock-based compensation 3.9 4.0 120.4
(117.4 )
Effect of exchange rate changes on cash (0.1
) 0.1
Cash and cash equivalents: Change in cash and
cash equivalents 158.0 (32.4 ) Balance, beginning of year 78.6
349.5 Balance, end of period $ 236.6 $ 317.1
B
RAYONIER INC. AND SUBSIDIARIES
BUSINESS SEGMENT SALES AND OPERATING
INCOME (LOSS)
March 31, 2012 (unaudited)
(millions of dollars)
Three Months Ended March 31, December 31,
March 31, 2012 2011 2011
Sales Forest Resources $ 52.2 $
52.5 $ 48.2 Real Estate 12.6 12.6 13.5 Performance Fibers Cellulose
specialties 212.1 230.3 194.0 Absorbent materials 38.8 50.5
57.2 Total Performance Fibers 250.9 280.8
251.2 Wood Products 19.2 17.4 15.8 Other Operations
21.1 26.7 30.4 Intersegment Eliminations (0.2 ) (1.6 ) (1.4 )
Total sales $ 355.8 $ 388.4 $ 357.7
Pro forma operating income/(loss) Forest Resources $
8.0 $ 13.5 $ 11.1 Real Estate 6.5 6.9 7.4 Performance Fibers 80.6
76.5 75.7 Wood Products 0.9 (1.1 ) 0.5 Other Operations (0.9 ) 0.5
0.7 Corporate and other (a) (11.1 ) (8.5 ) (7.8 )
Pro forma
operating income $ 84.0 $ 87.8 $ 87.6
(a) For the three months ended December
31, 2011, Corporate and other excluded a $6.5 million increase in a
disposition reserve.
C
RAYONIER INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
March 31, 2012 (unaudited)
(millions of dollars, except per share
information)
CASH AVAILABLE FOR DISTRIBUTION (a): Three Months
Ended March 31, March 31, 2012 2011 Cash provided by operating
activities $ 111.4 $ 115.7 Capital expenditures (b) (42.1 ) (34.8 )
Change in committed cash 4.6 (1.2 ) Excess tax benefits on
stock-based compensation 3.9 4.0 Other 8.8 4.1
Cash Available for Distribution $ 86.6 $ 87.8
(a) Cash Available for Distribution (CAD)
is defined as cash provided by operating activities adjusted for
capital spending, the tax benefits associated with certain
strategic acquisitions, the change in committed cash, and other
items which include cash provided by discontinued operations,
proceeds from matured energy forward contracts, excess tax benefits
on stock-based compensation and the change in capital expenditures
purchased on account. CAD is a non-GAAP measure of cash generated
during a period that is available for dividend distribution,
repurchase of the Company's common shares, debt reduction and
strategic acquisitions net of associated financing. CAD is not
necessarily indicative of the CAD that may be generated in future
periods.
(b) Capital expenditures exclude strategic
capital. For the three months ended March 31, 2012, strategic
capital totaled $41.1 million for the Jesup mill cellulose
specialties expansion and $8.7 million for timberland acquisitions.
For the three months ended March 31, 2011, strategic capital
totaled $2.9 million for timberland acquisitions.
PRO FORMA OPERATING INCOME AND NET INCOME:
Three Months Ended December 31, 2011 $
Per DilutedShare
Operating Income $ 81.3 Increase in disposition reserve 6.5
Pro forma Operating Income $ 87.8
Net Income $ 56.2 $ 0.45 Increase in disposition reserve,
net of tax 4.1 0.03
Pro forma Net Income $ 60.3
$ 0.48
D
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